London and Quadrant and the Walthamstow Greyhound Racing Stadium site.

SOS letter to HCA the social housing regulator (17 April 2012) and their response (17 May 2012)

Copies of the above letters are enclosed for your attention (listed below this posting).

The regulator has missed the point of our representation completely. Kevin Millgate has simplistically taken each allegation in turn and advised why the regulator does not have a remit to raise regulatory concern.

There are three areas of inadequacy in this instance that are sufficient to warrant investigation, our list of allegations should be read collectively. Together they provide evidence that cannot be ignored and which gives the regulator a remit to intervene.

Area of concern 1

What the regulator should be looking at here is the incompetence and mis-management of development activities by this RSL. Our allegations and the submitted evidence demonstrate this on one, major site beyond reasonable doubt. How many other sites lay in their books in a similar state?

We note that key development staff involved in the acquisition of this site has now all left the employ of L&Q. What other financial disasters have they left in their wake?

We have demonstrated to the regulator that this site will make a substantial loss of millions of pounds. Mr Millgate’s comments about rental income and retail rents in his reply to allegation 7 simply demonstrate that he does not understand the figures presented to him. These values have been capitalised in the viability illustrations we supplied with our letter.

These figures have now been confirmed by the release of L&Q’s own viability analysis (attached) submitted with the application and disclosed after a tortuous freedom of information battle whilst they desperately battled to keep the information from the public. They are also confirmed by the GLA’s own commissioned viability report which shows the scheme just about breaks even-so long as you ignore the price paid for the site (£18m) and the holding costs since 2008 (about £3m).

What needs investigation by the regulator is the competence of the development department at L&Q. Our allegations demonstrate why this is required based on our experiences at just one of their sites. There are others we know of in the same or neighbouring boroughs such as at Cat Hill where equally low provision of affordable and social units are being proposed due to very poor / negative viability positions.

The Walthamstow Stadium site provides only 24 affordable rent units and no social rented units at all. Given that the regulator is supposed to be checking that the RSL has a ‘strategic approach to achieving value for money in meeting their objectives’, we suggest that this very much demonstrates why an investigation is needed…assuming you agree that L&Q’s objective is one of delivering social and affordable housing?

As far as can be determined, the L&Q development team were all career RSL officers with very little private sector / commercial experience. It should be of concern to the regulator that such significant strategic mistakes have come to light and this RSL should be investigated to see where else their poor development acquisitions might be being covered up.

At a meeting about the Walthamstow Stadium site in 2011, L&Q’s Chief Executive stated, in front of both local MP’s, that they had a bank-roll of £400m and could deal with the financial ups and downs of the property market. The point here is, if they have many other ‘Walthamstow Stadiums’ in their portfolio, that £400m might start to look inadequate. It is hardly a value for money strategy for the use of publicly funded reserves is it?

Further when the viability position was eventually disclosed L&Q’s spokesperson proudly announced that they were not concerned and any shortfall’s would be funded from their reserves. The local Guardian’s quote was ‘L&Q said it did not consider the shortfall to be a “loss” because it would be funded by its reserves’. Well, L&Q’s reserves are funded by the taxpayer.

Most importantly, with respect to this issue, is the perception of the markets on L&Q’s financial position. L&Q recently raised significant sums on the bond market. To maintain investor confidence, the regulator should double check on this development department and make sure they don’t have any more skeletons in their cupboard. As we have stated above we mainly have knowledge of their operations in Waltham Forest but the problem may exist in other boroughs. The regulator is on notice with respect to this matter and failure to act could subsequently leave responsibility for failings of L&Q at the door of the HCA and the GLA. The money involved here (in the order of £20m) relates to the order of magnitude of sums published in recent regulator judgements and which have prompted intervention and investigation of RP’s. Why do L&Q not warrant the same level of scrutiny?

Area of Concern 2

L&Q has consistently misled the local public in their dealings with the site. The planning meeting last year provided a graphic demonstration of public discontent. Their actions have caused significant anger and frustration with the people of the borough of Waltham Forest where they are a partner/approved RSL. This has brought the RSL into disrepute and L&Q is widely viewed as an arrogant developer with little concern for the local communities.

When the new regulatory body was launched you will probably be aware of its luke-warm reception by those interested in the self regulated RSL sector. Another toothless lap-dog rather than a watch-dog summed up the response. Co-regulation wasn’t working and the initial response from Kevin Millgate suggests those sentiments might have been correct. We hope you will review this matter and instruct the investigation that is required. The money being wasted is neither the officers’ nor the board’s money. It is public money and must not be squandered like this.

Area of Concern 3

Boris Johnson publicly stated when he decided to allow the local planning decision to stand, that the L&Q scheme ‘more or less breaks even’. This showed an astonishing ignorance of the BNPParibas viability report which his own officers had commissioned to inform him about the viability of the L&Q development (copy attached). It only just about breaks even if the purchase price and holding costs are conveniently ignored (the purchase price alone was £18m).

What is the point in the GLA commissioning an expensive and professionally prepared report if they don’t actually understand what it is telling them.

Even more worryingly, the GLA is now responsible for handing out affordable housing grants and seems to be committed to contribute several hundreds of thousands to L&Q’s efforts here. Presumably the ignorance of this viability position continues at City Hall as all this grant money does is help L&Q offset some of their horrendous losses.

This is a public disgrace. The Local Authority contrived to help L&Q get their planning permission through for this redevelopment against the wishes of the majority of the local population. Our campaign group reluctantly accepts that this travesty has now probably run its course. HOWEVER…..that does not mean that the regulators and all those interested in efficient use of public funds should now turn a blind eye to this blatant waste of public money by an incompetent Housing Association’s development team. Similarly, how can the GLA be trusted with distribution of affordable housing grant when quite clearly the senior officers and the Mayor himself cannot correctly interpret a viability report (which they actually commissioned).

Related

2 Responses to Letter to The Rt Hon Eric Pickles (MP)

Central of Public Scrunity see attached file and see website http://www.cfps.org.uk/tenant-scrutiny
try them. I Left messages on inside housing (spelling was bad but I so angry with this Government that our rights being taken by these GOVERMENTS AND NO ONE WILL STAND UP TO THEM.

Quoting in the Report average Rent our £79 per week (well not in our case is 147.00 for a Three Bedroom ) new Affordable Rent average of £160 per week does say whether one, two, three or plus bedrooms) So whom in Walthamstow will be able to afford to live on this development see

All donations received will be used solely for the campaign to Save Our Stow. Regular account updates will be posted on our website and any monies remaining at the conclusion of our campaign will be donated to the Retired Greyhound Trust. Thank you for your support.

Local residents, voice your views and opinions

If any local residents would like to contact SOS directly - Rick Holloway is available by email: rickyjholloway@gmail.com or by phone: 07913 325674

Iain Duncan Smith (Secretary of State for Work and Pensions)

Iain will keep up the pressure on L&Q as he is determined to save the Stow for his constituents!

Stella Creasy MP

'In the words of Marks and Spencer, this isn’t just any dog track… this is the Walthamstow Stadium'

Mayor of London

'My vision for the regeneration of this site includes a range of leisure uses and new affordable housing with heritage assets protected and enhanced. Ideally, this would restore greyhound racing to this, its primary and historic home' - Mayor of London, Boris Johnson

Culture Minister

'It's the best surviving and most architecturally interesting vintage stadiums in the country, and a major East London landmark. It is only right that we should celebrate this architectural showpiece to popular entertainment by listing its key components' - Culture Minister, David Lammy

Save Walthamstow Cinema

Save Walthamstow Cinema hopes that Waltham Forest Council take the same decision with Walthamstow Stadium as they did with Walthamstow's EMD/Granada cinema. Namely to help safeguard it's future as one of the borough's most important leisure venues and heritage assets; providing a source of employment, pride, enjoyment and identity for future generations of Waltham Forest residents and visitors.

Residents views

No.1
Simply put L&Q have become a massive organisation and cash rich. They are doing what they want.
The land banking of the Stow site when there is a perfectly viable alternative proposal that will benefit all the community is almost criminal.
The delivery of social housing and affordable homes is now effectively privatised and these large organisations need feeding. I am not surprised they have ignored most of who will be affected as they have never asked anyone if they want the return of the Stow.
I hope the Councillors have seen through all this and refuse any L&Q applications until they learn to consult properly and react accordingly.

No.2
Did anyone notice that in last weeks waltham forest guardian there were no less that 3 seperate articles involving L&Q, In all 3 articles the residents of waltham forest disagree with L&Qs proposals and plans, yet L&Q still maintain “Thats its plans are shaped in consultation with local residents” are they talking about the 6% of local residents that were undecided whether they want greyhound racing to be returned to the “stow”. If L&Q are prepared to brush aside the wishes of 94% of local residents in order to get what they want then this says a lot about them as a charity, In my opinion, even though L&Q say thay will make a loss of £25 million if they redevelop the stow, The executives will probably earn tens of thousands of pounds from tendering contracts to various building companies and trades who will be queing up to do the work, i wonder where this money will go? i doubt if it will end up in L&Qs bank account, maybe thats why they are happy to make a loss of £25 million of taxpayers money so that they can beef up their own bank accounts. This whole affair leaves a very nasty taste in my mouth,
It is now time for the government to step in and put an end to this blatant wastage of taxpayers money and bring those responsable to justice, L&Qs behavior makes the MPs expenses scandal look like petty.